2001 (10) TMI 176 - AT - Central Excise

Summary

Issues:
1. Shortage of PVC Resin found during inspection
2. Allegation of clandestine removal of raw material
3. Imposition of duty and penalty by the Department
4. Adjudication by the Assistant Commissioner
5. Appeal before the Tribunal

Analysis:

1. The case involves the discovery of a shortage of 5200 Kgs. of PVC Resin during an inspection at the appellant's factory. The Director of the company admitted the shortage and paid the duty by way of PLA debits. The Department later proposed to confirm the duty demand, alleging clandestine removal of the raw material.

2. The appellants contested the show cause notice, explaining that the shortage was due to accumulated shortages and errors in weightments. The Assistant Commissioner confirmed the duty demand and imposed a penalty under Central Excise Rules. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

3. During the Tribunal hearing, the Director of the appellant reiterated the grounds of appeal, denying the allegation of clandestine removal. The Department argued that the duty payment implied an admission of the allegation. The Tribunal noted discrepancies in the appellant's explanations and the lower appellate authority's decision.

4. The lower appellate authority rejected the appellant's explanation regarding the utilization of 1500 Kgs. of PVC Resin for manufacturing final products without prior mention in the show cause notice reply. The Tribunal upheld this decision but found the penalty imposition unsupported by any specific reasoning. Consequently, the Tribunal set aside the penalty while upholding the duty demand.

5. In conclusion, the Tribunal allowed the appeal to the extent of setting aside the penalty imposed by the Assistant Commissioner. The case highlights the importance of consistent and detailed explanations in responding to show cause notices in excise duty disputes.